US consumer finance watchdog says it will replace Biden-era ‘open banking' regulations
The move by President Donald Trump's CFPB to remake the regulations was a reversal. The agency had previously said the court should scrap the rules, intended to give consumers greater control over their own financial data and boost innovation - marked a reversal.
'In light of recent events in the marketplace, the bureau has now decided to initiate a new rulemaking to reconsider the rule with a view to substantially revising it and providing a robust justification,' the agency said in a court filing, adding that it would begin an 'accelerated' rulemaking process within three weeks.
Under former President Joe Biden, the CFPB proposed regulations to govern data sharing between fintech firms and traditional banks, allowing consumers to easily transfer their personal data between providers free of charge.
Called for under the landmark 2010 Dodd-Frank Wall Street reform legislation, the regulations were also intended to help reduce costs and increase the kinds of services available to consumers.
However, the banking industry quickly sued to block aspects of the rule, arguing that it would endanger bank customers' privacy and the security of their data.
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The fintech industry said to the contrary it offered security protections and that scrapping the rule would be a handout to large banks that hampers competition. The CFPB had told the court in May it believed the regulations exceeded the agency's legal authorities and should be scrapped.
Earlier this month, Bloomberg reported that JPMorgan planned to charge fintech companies for access to its customers' account data.
US District Judge Danny Reeves of the Eastern District of Kentucky said on Tuesday he was granting the CFPB's request for a stay in part because this would help the agency work with stakeholders and the broader public to redesign the regulations.
According to CFPB's filing, the Bank Policy Institute, an industry trade organisation, opposed granting the stay. But financial technology groups said they hoped to participate in the effort to remake the regulations. REUTERS
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